PSSI » Topics » Estimating Useful Lives of Property and Equipment

This excerpt taken from the PSSI 10-K filed May 25, 2007.

Estimating Useful Lives of Property and Equipment

Property and equipment is recorded at cost and is depreciated on a straight-line basis over the following estimated useful lives.

 

     Useful Life

Equipment

   2 to 15 years

Capitalized internal-use software costs

   5 to 15 years

Computer hardware and software

   3 to 15 years

Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives. Management must use judgment in determining the estimated useful lives of its assets. Changes in circumstances, such as technological advances, changes to the Company’s business model, changes in the Company’s business strategy, or changes in the planned use of property and equipment, could result in the actual useful lives differing from the Company’s current estimates. In those cases where the Company determines that the useful life of property and equipment should be shortened or extended, the Company would depreciate the net book value in excess of the estimated salvage value over its revised remaining useful life.

During fiscal year 2005, management reviewed the estimated useful lives of certain computer hardware and software in connection with completing the implementation of the JD Edwards enterprise resource planning (“ERP”) system. Based on this review, management revised the estimated useful lives of certain assets after considering (i) the Company’s historical use of its prior ERP systems, (ii) future plans for the JD Edwards ERP system, (iii) expected enhancements, and (iv) expected ongoing product support, enhancements, and maintenance commitments from the supplier. Management believed this change in estimate was appropriate given the Company’s commitment to and invested capital in the customization and future use of the JD Edwards ERP platform. As a result, the remaining estimated useful lives of certain computer hardware and software with a carrying value of approximately $27.4 million were extended on March 23, 2005 to coincide with the expected service life of the assets in accordance with Accounting Principles Board Opinion No. 20, Accounting Changes. The weighted average remaining useful life of the assets prior to the change in estimate was approximately 80 months and the change in estimate lengthened the estimated useful lives by approximately 40 months. This change in estimate decreased depreciation expense $1.0 million, net of tax, or approximately $0.01 of diluted earnings per share, for the fiscal year ended March 30, 2007 and $1.1 million, net of tax, or approximately $0.02 of diluted earnings per share, for the fiscal year ended March 31, 2006.

This excerpt taken from the PSSI 10-Q filed Feb 7, 2007.

Estimating Useful Lives of Property and Equipment

Property and equipment is recorded at cost and is depreciated on a straight-line basis over the following estimated useful lives.

 

Useful Life

 

 

Equipment

2 to 15 years

Capitalized internal-use software costs

5 to 15 years

Computer hardware and software

3 to 15 years

 

 

 

Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives. Management is required to use judgment in determining the estimated useful lives of such assets. Changes in circumstances such as technological advances, changes to the Company’s business model, changes in the Company’s business strategy, or changes in the planned use of property and equipment could result in the actual useful lives differing from the Company’s current estimates. In those cases where the Company determines that the useful life of property and equipment should be shortened or extended, the Company would depreciate the net book value in excess of the estimated salvage value over its revised remaining useful life.

During fiscal year 2005, management reviewed the estimated useful lives of certain computer hardware and software in connection with completing the implementation of the JD Edwards enterprise resource planning (“ERP”) system. Based on this review, management revised the estimated useful lives of certain assets after considering (i) the Company’s historical use of its prior ERP systems, (ii) future plans for the JD Edwards ERP system, (iii) expected enhancements, and (iv) expected ongoing product support, enhancements, and maintenance commitments from the vendor. Management believed this change in estimate was appropriate given the Company’s commitment to and invested capital in the customization and future use of the JD Edwards ERP platform. As a result, the remaining estimated useful lives of certain computer hardware and software with a carrying value of approximately $27.4 million were extended on March 23, 2005 to coincide with the expected service life of the assets in accordance with Accounting Principles Board Opinion No. 20, Accounting Changes. The weighted average remaining useful life of the assets prior to the change in estimate was approximately 80 months and the change in estimate lengthened the estimated useful lives by approximately 40 months. This change in estimate decreased depreciation expense by $1.1 million, net of tax, or approximately $0.02 diluted earnings per share for the fiscal year ended March 31, 2006.

This excerpt taken from the PSSI 10-Q filed Nov 8, 2006.

Estimating Useful Lives of Property and Equipment

Property and equipment is recorded at cost and is depreciated on a straight-line basis over the following estimated useful lives.

 

Useful Life

 

 

Equipment

2 to 15 years

Capitalized internal-use software costs

5 to 15 years

Computer hardware and software

3 to 15 years

 

 

 

Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives. Management is required to use judgment in determining the estimated useful lives of such assets. Changes in circumstances such as technological advances, changes to the Company’s business model, changes in the Company’s business strategy, or changes in the planned use of property and equipment could result in the actual useful lives differing from the Company’s current estimates. In those cases where the Company determines that the useful life of property and equipment should be shortened or extended, the Company would depreciate the net book value in excess of the estimated salvage value over its revised remaining useful life.

During fiscal year 2005, management reviewed the estimated useful lives of certain computer hardware and software in connection with completing the implementation of the JD Edwards enterprise resource planning (“ERP”) system. Based on this review, management revised the estimated useful lives of certain assets after considering (i) the Company’s historical use of its prior ERP systems, (ii) future plans for the JD Edwards ERP system, (iii) expected enhancements, and (iv) expected ongoing product support, enhancements, and maintenance commitments from the vendor. Management believed this change in estimate was appropriate given the Company’s commitment to and invested capital in the customization and future use of the JD Edwards ERP platform. As a result, the remaining estimated useful lives of certain computer hardware and software with a carrying value of approximately $27.4 million were extended on March 23, 2005 to coincide with the expected service life of the assets in accordance with Accounting Principles Board Opinion No. 20, Accounting Changes. The weighted average remaining useful life of the assets prior to the change in estimate was approximately 80 months and the change in estimate lengthened the estimated useful lives by approximately 40 months. This change in estimate decreased depreciation expense by $1.1 million, net of tax, or approximately $0.02 diluted earnings per share for the fiscal year ended March 31, 2006.

This excerpt taken from the PSSI 10-K filed May 26, 2006.

Estimating Useful Lives of Property and Equipment

Property and equipment is recorded at cost and is depreciated on a straight-line basis over the following estimated useful lives.

 

    

Useful Life

Equipment

   2 to 15 years

Capitalized internal-use software costs

   5 to 15 years

Computer hardware and software

   3 to 15 years

Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives. Management is required to use judgment in determining the estimated useful lives of such assets. Changes in circumstances such as technological advances, changes to the Company’s business model, changes in the Company’s business strategy, or changes in the planned use of property and equipment could result in the actual useful lives differing from the Company’s current estimates. In those cases where the Company determines that

 

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the useful life of property and equipment should be shortened or extended, the Company would depreciate the net book value in excess of the estimated salvage value over its revised remaining useful life.

During fiscal years 2006, 2005 and 2004, the Company adjusted the useful lives of certain assets in accordance with APB 20. The estimated useful lives of certain computer hardware and software with a carrying value of approximately $27.4 million were extended 120 months on March 23, 2005 to coincide with the expected service life of the assets. Computer hardware and software capitalized subsequent to this change in estimate is being depreciated over a period ranging from 3 to 10 years. This change in estimate resulted in a decrease in depreciation expense of approximately $1.1 million, net of tax, or approximately $0.02 diluted earnings per share, for the fiscal year ended March 31, 2006. During fiscal years 2005 and 2004, the impact to depreciation expense as a result of adjusting the useful lives of certain assets was immaterial.

This excerpt taken from the PSSI 10-K filed Jun 15, 2005.

Estimating Useful Lives of Property and Equipment

 

Property and equipment is recorded at cost and is depreciated on a straight-line basis over the following estimated useful lives.

 

     Useful Life

Equipment

   5 to 15 years

Computer hardware and software

   3 to 15 years

 

Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives. Management is required to use judgment in determining the estimated useful lives of such assets. Changes in circumstances such as technological advances, changes to the Company’s business model, changes in the Company’s business strategy, or changes in the planned use of property and equipment could result in the actual useful lives differing from the Company’s current estimates. In those cases where the Company determines that the useful life of property and equipment should be shortened or extended, the Company would depreciate the net book value in excess of the estimated salvage value over its revised remaining useful life.

 

During fiscal years 2005, 2004, and 2003, the Company adjusted the useful lives of certain assets in accordance with APB 20; however, the impact to depreciation expense was immaterial. During fiscal year 2006, the estimated useful lives of certain computer hardware and software with a carrying value of approximately $27.4 million will be extended 120 months from March 23, 2005 to coincide with the expected service life of the assets. Computer hardware and software capitalized subsequent to this change in estimate will continue to be depreciated over a period ranging from 3 to 10 years. This change in estimate is expected to result in a decrease in depreciation expense of approximately $1.1 million, net of tax, or approximately $0.02 diluted earnings per share, for the fiscal year ended March 31, 2006.

 

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